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Financial Education

10 Big Life Changes that Can Grow Your Wealth BIG Time

(Hint: Your daily coffee run or avocado toast cravings aren't killing your financial dreams.)

Woman smiling and making it rain money after making big life changes.
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To get a handle on your finances, you’ve probably read articles about making small changes that add up. The suggestions are normally helpful and easy to adopt. But here’s the caveat: Although your daily coffee run may set your monthly budget back, it’s not what’s preventing you from reaching your financial dreams of, say, early retirement or becoming a millionaire. Big life changes are when you see big financial results. If you are serious about growing your money, here are 10 serious life changes that will help you grow your wealth: big time.

1. Trade in your car (for public transit or a cheaper model).

The share of new car buyers with a monthly payment of more than $1,000 jumped to a record high in the last quarter of 2022, according to Edmunds, with many Americans choosing expensive SUVs, and add-ons, increasing the price even more.

Trading in your car for public transit is a great example of an impactful change you can make to save you money. Between your car payment, insurance premium, fuel, tolls and maintenance, owning a vehicle can easily cost $1,000 a month. At that rate, you’d save $10,800 a year even with monthly bus or train fare of $100. If your current car expenses total $1,500 a month, your annual savings would top $16,000. Better still for your budget and your health, can you walk or bike to work?

If that’s not feasible, consider trading in your current vehicle for a cheaper one. For example, the Lexus RX 350 is one of the most popular vehicles on the road. A 2022 model in excellent condition has a trade-in value of approximately $44,018, according to Edmunds. You could save close to $18,000 by trading it in for something like a 2021 Toyota RAV4 that Kelley Blue Book says goes for about $26,000. You get an added bonus when your cheaper car gets better gas mileage. Plus, it’s likely to cost less to insure and maintain.

2. Get a roommate.

Do you live alone? The average one-bedroom apartment in February 2023 rented for $1,152 a month, amounting to $13,824 a year. By comparison, a two-bedroom apartment rented in the same period for $1,320 a month, or $660 per roommate. That yields $5,904 in savings in rent alone in one year and $29,520 over five years. Plus, you and your roommate can split the cost of utilities, streaming TV services, cleaning supplies and even food if you like.

If you’re a homeowner living by yourself, adding one or more roommates can offset the cost of your mortgage and other things like your property taxes, homeowners insurance and routine maintenance.

3. Live on one paycheck.

Maybe you have a dual-income household. Just because you bring in two salaries, doesn’t mean you have to budget with both. Recalculate your budget assuming you need to live on one paycheck, typically the higher one. Can you make it work by finding cheaper options for essential items, such as a less expensive internet service provider, or cutting back on discretionary items like gym memberships, subscription services and entertainment?

If so, put the second salary directly toward your savings goals. (And watch that money pile up!)

4. Increase your salary.

You can also look for ways to increase your regular take-home pay, such as the following:

  • Ask your boss for a raise
  • Put your name in the hat for a promotion at a higher pay grade
  • Look for a better-paying job with a different employer

According to the Atlanta Fed, wage growth for those who switch employers has been on the rise since 2021, even as high as 8.5%. This is significantly more than the typical 3-5% raise that often comes with annual reviews, and it amounts to an annual salary jump of between $4,250 and $8,500 for current salaries between $50,000 and $100,000. Depending on the benefits offered, your new compensation package could be even more valuable.

5. Get a side hustle.

Another way to bring in more cash is taking on a side hustle. Online options include setting up a dropshipping business, starting a podcast or creating a blog that features affiliate marketing or your own products. Other side gig possibilities involve driving for a ridesharing service, tutoring or pet sitting.

See how quickly extra cash can start funding your financial dreams if you earn these weekly amounts through a side gig or two:

  • $100/week equals $5,200/year
  • $500/week equals $26,000/year
  • $1,000/week equals $52,000/year

6. Eliminate credit card debt.

It’s difficult to make financial dreams a reality when caught in a credit card spiral, meaning your balance grows despite monthly minimum payments. Unfortunately, debt spirals occur for many reasons, including unexpected expenses, job layoffs and overspending. But as a credit card calculator shows, paying only $100 a month on a $5,000 balance at 18.99% will take you eight years to pay off. And you’ll pay $4,977 in interest in that time!

The above lifestyle changes can help you pay off your credit card balances and other debt using one of these methods:

  • Snowball: Focusing first on the debt with the smallest balance
  • Avalanche: Focusing first on the debt with the highest interest rate (the method that will save you the most in interest, so the one we recommend)

Once you do, what you save in interest can go toward your financial goals.

7. Transfer your money to a high-yield savings account.

Don’t forget to make your money work for you by ensuring it’s earning as much interest as possible. Despite recent Fed rate increases, the national average for interest on a savings account is still well below 1.00% APY, per the FDIC. However, credit unions (like Quorum) typically offer better rates on high-yield savings and term accounts. Just look at the difference below (calculate how much you can earn with a high-yield savings account using our Savings Calculator):

Savings Account Balance Annual Interest Earned at 0.39% Annual Interest Earned at 4.00%
$1,000 $3.90 $40
$10,000 $39 $400
$20,000 $78 $800

8. Refinance your 30-year mortgage (or simply make an extra payment each year).

When you refinance your 30-year mortgage to a 15-year mortgage (or to a more favorable interest rate), you stand to save big on overall interest charges because much more of your monthly payment goes toward repaying the principal of the loan. Crunch the numbers here using our “Should I Refinance?” calculator to see how much you can potentially save.

If you can’t afford to refinance, simply making one additional mortgage payment a year is one of the most effectives ways to chip away at the principal and save thousands of dollars (see our example here for how much money—and time—you can save).

9. Move.

Maybe you’ve bought more house than you needed, and realize your monthly mortgage payments (or utility bills) are too high, and are not allowing you to save money. Maybe your property taxes have risen astronomically. Downsizing, or moving to a cheaper area, could save you loads of money over the course of the time in a new, more affordable home. (Just be sure to run the numbers, as there are always considerable costs associated with buying/selling a home and moving.)

10. Start investing.

The last big change: Start investing an affordable sum once you’ve set aside emergency savings of three to six months’ worth of expenses. For example, investing in companies listed on the S&P 500, which currently includes Apple, Microsoft and Amazon, have historically yielded a 10% average annual return. Mutual funds tied to the S&P is an easy way to get started. Just be sure you fully understand anything you invest in and don’t risk more than you’re willing to lose.

Have more BIG life changes that can’t grow your finances big time? Tell us about them in the Comments section below!

Editor’s note: Quorum is not affiliated with any of the companies mentioned in this article and derives no benefit from these businesses for placement in this article.

NEW Rate: Earn 4.25% APY* with HighQ. Get more out of your money with HighQ Savings—a liquid, online savings account that lets you earn a top-of-market rate with no minimum balance requirements.

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CUNA 2023 diamond award trophy icon

CUNA 2023 Diamond Award Winner

Financial Education

Quorum derives no benefit from businesses in return for placement in this blog.

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